SDP National Healthcare Plan

8/2/2019 SDP National Healthcare Plan

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(FOR PUBLIC CONSULTATION)

S I N G A P O R E D E M O C R A T I C P A R T Y

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Presented by theSDP Healthcare Advisory Panel

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CONTENTS

FOREWORD 5

ACKNOWLEDGEMENTS 6

THE SDP HEALTHCARE ADVISORY PANEL 7

I. INTRODUCTION 10

The Economic Argument for Healthcare Investment 11Commercialisation of Healthcare and The Need to Change Mindsets 11Healthcare Spending 12Healthcare Indicators 15Singapore Healthcare: A Broken System? 16Recent Healthcare Changes Too Little, Too Late? 17

Budget 2012 18

II. SINGAPORE DEMOCRATIC PARTY HEALTHCARE PLAN 21

A. HEALTHCARE INFRASTRUCTURE AND MANPOWER

INVESTMENT PROGRAMME 21

B. HEALTHCARE ISSUES 23

Affordability versus choice 23Funding Models (Addendum A) 23

Private InsuranceBased or Government-Run? 24

C. PROPOSED NATIONAL HEALTHCARE PROGRAMME 25

Revenue for Government spending on Healthcare (Addendum B) 26Contribution to the National Health Investment Fund (NHIF) 26Quantum of Individual Contribution to the NHIF 27Collection of Contribution 29

National Healthcare Benefits Card 29Co-payment 30Capping 31

Details of Additional Healthcare Plan Subsidies 32Exclusion List 34The 3Ms (Medisave, MediShield and Medifund) 34Medisave 34MediShield 35Medifund 36Master Drugs List 37Reserve Drugs List 37

National Formulary 38Primary Care 38Secondary Care 38Tertiary Care 39

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Intermediate and Long Term Care (ILTC) 40Residential ILTC Services 40Community and Chronic Sick Hospitals 40Other ILTC Residential Institutions 41Community-based ILTC Services 42Preventive Healthcare 43Medical Research 43Private Medicine 44Private Insurance 44Accidents/Work Injuries 44Foreign Workers 44

III. HEALTHCARE COSTS 46

HEALTHCARE COST CONTAINMENT 46

Capitation 47Over-charging in third-party payment schemes 48The Buffet Syndrome and the Prevention of Abuse of a Pre-Paid

Healthcare Service 49Drug / Devices / Investigative Costs 49The Practice of Cost-effective Medicine 50Mediation and Tort Reform 50Audit and Compliance 50Hospital Charges 51Healthcare Contingency Fund 51Expert Committees 51

Economically Favourable effects of the Healthcare Plan 52

IV. CONCLUSION 53

V. ADDENDA 55

Addendum A: Main healthcare models 55Addendum B: Sources of revenue for extra Government spending on

Healthcare (Preliminary) 63Addendum C: National Health Investment Fund Contribution Options &

Quantum of Individual Contribution & Estimated Total Co-

payment Amount 66Addendum D: Monthly Contribution Rates to Medisave Account 72Addendum E: An Alternative: Insurance Company Management of

Healthcare Plan 73Addendum F: MediShield: List of Excluded Treatments & Expenses 76Addendum G: MediShield premium amounts and MLR calculation 77Addendum H: DOHA Declaration 2001 79Addendum I: Alternative Hospital Admission Policy 80Addendum J: Capitation: Local Implementation Study 81

VI. REFERENCES 83

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FOREWORD

Just weeks after the general elections in May 2011, the SingaporeDemocratic Party put together an Advisory Healthcare Panel com-

prising several medical doctors and healthcare professionals whohad come forward to help us during the elections. Under our PolicyUnit headed by Dr James Gomez, the Panel got down to work on analternative healthcare plan for Singapore. This was an extension andan elaboration of the healthcare programme we had proposed duringthe elections.

Nine months, several meetings and countless exchanges of emails later, a documentemerged that we are proud to present to this nation. For the first time in Singapore's

political history, an opposition party has come up with a comprehensive and detailedprogramme to chart the future for healthcare in this country. It is a plan that is in linewith SDP's vision of fostering a compassionate and egalitarian Singapore. It putsforth policies that coalesce around the idea that a healthcare system must take care of

anyone and everyone who needs medical assistance.

Equally important is that our plan looks at the question of sustainability. It builds ineffective cost containment measures to prevent health expenditure from spiralling outof control and bankrupting the system. Our proposals also ensure that the system is:One, easy to manage as it has only one level of administration instead of the presentcomplex Medisave, Medifund and Medishield schemes; two, transparent andaccountable as it does away with questionable subsidies that the government claims togive; and three, minimises the use of our Central Provident Fund savings.

I want to thank the Panel members for their scholarship and erudition, not to mention

the hours of hard work that they had put into this massive project. What is most signi-ficant, however, is the compassion that these professionals demonstrate. Convicted bytheir sense of right and wrong, they have been moved to write their vision of ahealthcare system that takes care ofall. With Singaporeans like them, there is hopeyet for our nation.

For a long time, Singaporeans know that healthcare is extremely expensive and many,if not most, find it unaffordable especially if one, or one's loved one, meets with acatastrophic or chronic illness. But they do not know what an alternative system lookslike and what the government should do to make medical care people-centric ratherthan profit-oriented. Now there is a plan that shows the Singaporean people what they

have been missing all these decades. It opens the window to a whole new system thatSingaporeans never realised was possible.

We have striven to make ours a caring and financially sound plan. But we would liketo make it an even a better one by consulting you and inviting you to give us yourinput. To this end, we present to you The SDP National Healthcare Plan: Caring For

All Singaporeans.

Chee Soon JuanSecretary-General

Singapore Democratic Party

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ACKNOWLEDGEMENTS

The SDP Healthcare Advisory Panel would like to express its heartfelt gratitude toMr Ansari Abudeen, healthcare economist and doctoral candidate at the University of

New South Wales, who gave invaluable advice to the panel during the policyformulation stages on the economic aspects of running a healthcare system, withespecial attention to managing healthcare costs and the positive impact of universalhealthcare coverage on economic growth. His constant exhortation for us to measureour policy against the best healthcare systems in the OECD inspired us to strivetowards a healthcare plan that will be the touchstone by which all future policies aremeasured.

Many thanks also go to Dr James Gomez, Head of Policy Unit, SDP, who wasinstrumental in adding a political thrust to our policy paper through his frequentinputs and painstaking edits to the draft. He dedicatedly supervised and co-ordinatedthe groups activities in the lead-up to the publication and launch of the plan.

Ms Tan Ee Lyn has been especially helpful in providing a critique of the paper andplaying the devil's advocate to help us prepare for the launch of a groundbreakingpolicy paper such as this. We appreciate your help, Ee Lyn.

To all the SDP members who turned up for the internal presentation of this paper, wesay a big thank you. Your robust feedback was much appreciated, and major revisionsto the draft were made in the light of your recommendations as well as misgivings.We are also grateful to Mr Tan Jee Say, who stood as an SDP candidate in HollandBukit Timah Group Representation Constituency in General Election 2011, for histhoughtful and encouraging remarks at the presentation. His National EconomicRegeneration Plan played a pivotal role in re-orientating us to the importance of

allocating adequate resources to infrastructural and manpower development in abalanced and sound healthcare policy.

Through all the months of hard work put in by the entire team into this project, wewould be remiss not to mention the loving support given us by our spouses andfamilies. These are the unnamed people who are an inestimable source of moralstrength and comfort behind the completion of every monumental task. To them weowe an immense debt of gratitude.

We would also like to express our utmost appreciation to a few close friends andassociates who would wish to remain anonymous for offering their unstinting advice

on how to make a good healthcare plan even better.

Finally, this project would not have taken off if not for the active advocacy of ourparty leader, Dr Chee Soon Juan. His calibrated idealism and compassionate vision ofa better world for all, from beginning to end, have provided the impetus behind theformation of this advisory panel and the launching of this landmark project. Under hisnurturing guidance and mentorship, the group gelled together and achieved a singularfocus on delivering a healthcare plan that any political party in the world would be

proud to call its own. From the bottom of our hearts, we thank you, Dr Chee.

The SDP Healthcare Advisory Panel9 March 2012

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THE SDP HEALTHCARE ADVISORY PANEL

Dr Ang Yong Guan graduated from the National University ofSingapore in 1979 with a medical degree and did his post-graduatetraining in psychiatry at the University of Edinburgh from 1984 to1986. Upon his return from Edinburgh, he served as a psychiatristwith the Singapore Armed Forces (SAF) for 17 years. Dr Ang iscurrently in private practice as a Consultant Psychiatrist. He was thePresident of the Singapore Psychiatric Association and Chairman ofthe Chapter of Psychiatrists, Academy of Medicine. He is thefounding and current Chairman of the Action Group for Mental

Illness (AGMI). He is also a member of the Clinical Advisory Committee for ChronicDisease Management Programme on Mental Illness 2009.

Dr Cheng Shin Chuen, Consultant Surgeon, read Medicine at theUniversity of New South Wales, Australia and graduated in 1998.He completed his basic and advanced specialty training in GeneralSurgery in Singapore in 2006. He was a senior Clinical Fellow inVascular and Endovascular Surgery in Prince of Wales HospitalSydney in 2007. Dr Cheng was the Head of Vascular andEndovascular Service at the department of General Surgery, TanTock Seng Hospital, Singapore and adjunct Assistant Professor,Yong Loo Lin School of Medicine, National University of

Singapore. Dr Cheng has also been invited overseas to supervise or proctor complexsurgical procedures.

Ms Eveline Howis a corporate communications and marketingmanager at a utility company. Her interest in healthcare stemsfrom her being the main provider for her immediate familymembers medical expenses. Other than healthcare, she is also ananimal welfare advocate. She graduated from the NationalUniversity of Singapore with a Bachelor of BusinessAdministration and a Graduate Diploma in Law.

Dr Patrick Kee, MBBS (S'pore), M. Med (Int Med) S'pore,FRACP (Aust), FAMS, GDGM. Dr Kee is a specialist inPalliative Medicine who has been caring for the terminally ill forthe past 10 years. He is currently working part time with theHCA Hospice Care and is a director of TLC Home MedicalServices Pte Ltd.

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Dr Leong Yan Hoi obtained his M.B.,B.S. from the NationalUniversity of Singapore in 1988. He subsequently obtained hisDesignated Factory Doctor registration in 1997. Dr Leong has

been practising as a General Practitioner in an HDB clinic forthe past 15 years.

Dr Neo Eak Chan graduated from the University of Singaporein1968. He subsequently became a private practitioner running

his own clinic. In 2000, he organised and ran Ezyhealth, apublic-listed health provider company. In 1991, he was also inthe Committee of the Singapore Medical Association thatsubmitted its views to the National Health Review Committee.He was also a former Chairman of Ayer Rajah CCC. Dr Neo

believes that the best healthcare is preventive health and anygood healthcare system should focus on primary health as itsmain priority.

Associate Professor Paul Ananth Tambyah is a graduate of the

National University of Singapore's Medical School where heobtained both the MBBS and MD degrees. After completing hisnational service, he did postgraduate training in InfectiousDiseases at the University of Wisconsin, USA. He returned toSingapore and has served on a number of national andinternational committees including the Board of the Society ofHealthcare Epidemiology in America and the Council of theWestern Pacific Committee on Clinical Microbiology andInfectious Diseases. He is currently in academic medical practiceat a major teaching hospital in Singapore.

Dr Tan Lip Hongobtained his M.B., Ch.B. from LeicesterUniversity, U.K. in 1988, and returned to Singapore for hisclinical training. He subsequently obtained his M.Med.(Occupational Medicine) from the National University ofSingapore in 1994. Dr Tan has worked as a General Practitionerin the heartlands for the past 17 years.

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Dr Toh Beng Chye obtained his M.B.,B.S. from the NationalUniversity of Singapore in 1988. He subsequently obtained hisDesignated Factory Doctor registration in 1997. Dr Toh has been

practising as a General Practitioner in an HDB clinic for the past16 years.

Dr Wong Wee Nam graduated with MBBS from the Universityof Singapore in 1972. After his housemanship, he served as a

medical officer with the Singapore Armed Forces and,subsequently, the Ministry of Health. Over the years, he haspublished many letters on Health issues in the Straits Times. InMay 1991, he submitted a paper to the Health ReviewCommittee that was formed by the government to look into the

problems of healthcare at that time.

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I. INTRODUCTION

Healthcare is a basic right as enshrined in the Universal Declaration of Human Rightsand other similar covenants. It is not a commodity, and we believe that market forceshave no part to play in the financing or delivery of basic healthcare to the people inour country. This was historically the case in Singapore. The availability of low-cost,affordable, quality healthcare in the 1950s, 60s and 70s was one reason forSingapores rapid progress into the ranks of developed nations.

No one should go bankrupt while seeking life-saving medical treatment and no sickperson should be discriminated against on the basis of their wealth. If healthcare is abasic right, then the system must be designed to ensure that even the poorest canafford basic and essential healthcare.

Towards this end, it is critical that we move towards becoming a co-operative societyin which we care and share with one another. We are not advocating a welfare state

but the poor and needy should not become the objects for charity and handouts in an

increasingly individualistic society. This is most demeaning. We need to affirm theworth and dignity of every Singaporean.

No one willingly falls sick but when it comes to healthcare consumption, due toinherent information asymmetry, the patient becomes an irrational consumer. This isaffected by:

The demand by the patient because of fear or anxiety or lack of accurateinformation. The demand created by the providers. The demand created by laboratories, pharmaceutical companies, new technologies

and a profit-orientated healthcare system.

All these demands do not necessarily result in better healthcare. One key way to keephealthcare affordable, safe and effective is to find ways to restrict irrational and

profit-orientated demands. It can be addressed somewhat with the right healthcarefinancing model and also a more creative form of healthcare delivery.

What is the aim of good healthcare? It is to ensure the physical, mental and socialwell-being of each and every one of our citizens. This has long been recognised bythe World Health Organisation (WHO) and United Nations Childrens Fund(UNICEF) in the 1978 Alma Ata declaration.

Except for irrational or profit-driven demands, healthcare is a necessity. As such, it istotally unacceptable in a developed country that any person who is sick be deniedaccess to healthcare. This is a basic human right that must be accorded to everyone,even the poor or those who cannot afford it.

However because healthcare has different meanings for different people, and alsoelicits different expectations from different individuals, healthcare expenditure variesfrom individual to individual and cannot be predicted with a great degree of certainty.

It is not possible to predict what illness a person may suffer or who may meet with anaccident or a catastrophic illness, or be sure how large a medical bill he or she will be

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landed with. For this reason, it is not possible for anyone to estimate his or herhealthcare needs in the future with any certainty. No matter how prudent one is, thereis no way that ones savings can be enough for every complication or eventuality ifthere is no rational approach to the financing and delivery of the healthcare system.For the many individuals and families who have experienced this, they will knowhow easily their Medisave accounts can be depleted with just one catastrophic illnessor a major complicated operation.

Good health is also dependent on good nutrition, a clean environment, good housing,low stress levels, gainful employment and the absence of poverty. If a sick person isafraid to go to hospital because of the costs, then he is likely to defer medicalattention until it is too late to prevent the complications of his underlying disease.This leads to even higher costs and often loss of livelihood. If the medical bills are sohuge as to make him poor and lose his home, this is a vicious cycle that will furtheraggravate his ill-health.

The Economic Argument for Healthcare Investment

It is widely accepted that economic status contributes to health. It stands to reasonthat the converse is true as well: health status contributes to economic outcomes.After all, healthy people are generally more productive.

A recent study1

by the World Bank and WHO has revealed that investing inhealthcare leads to more economic growth. It found that healthy citizens are more

productive, earn more, consume more and work longer, all of which have a positiveimpact on the Gross Domestic Product (GDP) of a country. Better health also reducesthe financial costs of healthcare for the family, the community, the private sector andthe government. The report states that recent findings on the impact of health as

measured by life expectancy on economic growth suggest that one extra year of liferaises GDP by 4 per cent.

The study also notes that mechanisms need to be put in place to pool risks and ensurea more equitable approach to health, better manage health financing and promotecross-sectoral initiatives and programmes among others. A sound healthcare plan willhave to address these issues and incorporate the appropriate mechanisms.

Commercialisation of Healthcare and The Need to Change Mindsets

Since the move by the Singapore government to turn all healthcare into an industry in

the mid-1980s, they have commercialised medical care, and patients and diseaseshave become ways to make money. Medicine has become a business rather than avocation.

The Ministry of Health has the responsibility to be a role model of healthcare as asocial responsibility rather than being part of a system that turns medical care into a

business enterprise. This social responsibility is practiced in many but not alldeveloped countries.

In this regard, a much higher percentage of government revenue collected must bechannelled into healthcare for our citizens. This is the only way to ensure universalityand affordability of healthcare.

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Secondly, we need to recognise that the essence of a democratic society is a caringand sharing co-operative. We pool our resources for the common good - that is the

primary objective of our taxes - paying for national concerns such as defence anduniversal primary education. This gives value to our citizenship.

Thirdly, it is important to recognise that different areas of healthcare require differentforms of health financing:

a.Maternal and child care services these should be largely free and funded by thegovernment from the taxes as these are health promoting and have a vital role in thefuture of our nation. This would reduce the cost of producing and bringing upchildren and potentially address the problem of our falling birth rates.

b.Primary healthcare services for chronic illnesses, these should be paid through arisk pooling system so that the cost of running these services will be shared by all inthe community.

c.Hospital services the running costs of the hospitals must be paid from taxes. Thisis the only way to bring down the cost of services at the point of use.

d. Hospice care caring for the dying. No one can abuse such services and suchservices should not be dependent on charity. Funding for such services should befrom our taxes as well as from donations from appreciative family members of thecare receivers as well as other donors. The bulk of the running cost of such servicesshould be funded by the MOH, as most of the healthcare workers in hospice care arecurrently salaried. Currently, the MOH subsidy is based on the visits made by thedoctors, nurses and social workers rather than the salaries paid to them.

e. Home care for the non-ambulant chronic sick these services should also befunded in the same way as hospice care. Again, no one is going to deliberately chooseto be home-bound and non-ambulant just to abuse these services.

Fourthly, there must be greater expansion of the use of other healthcare workers forthe delivery of healthcare especially in chronic illnesses and home care. Void decksshould be made available for voluntary and community organisations to bringhealthcare closer to these patients.

We also need to recognise the importance of our environment and family servicecentres in contributing to the health of our nation. It is important to understand that

providing more medical services alone does not necessarily result in better health forour citizens. This has to be part of a holistic approach to the well-being ofSingaporeans.

Healthcare Spending2

Total expenditure on healthcare in Singapore has hovered around 3% of GDP inrecent years. This is close to the average of 5% of GDP in low-income and lower-middle-income countries. High-income countries (of which Singapore is classified asone by the World Health Organisation) spend a much higher percentage of about 11%of GDP (Addendum A). Part of the reason for this is that Singapore has a relativelyyoung population compared with most high income countries; the other part is that a

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large proportion of healthcare expenditure in Singapore is in the arena ofcomplementary and alternative medicine and this is not well documented in officialstatistics according to leading health economists.In addition, the bulk of the expenditure in Singapore is borne by private individualsand organisations, and only about a third is accounted for by Government comparedto the average figure of 61% in high-income countries.

This means that the Singapore Government spends only about 12% of GDP onhealthcare a year.

The extremely low expenditure by the Government vis--vis other countries is adeliberate policy to get healthcare costs to be self-funded as much as possible bycitizens through contributory schemes such as Medisave and MediShield, the latter

being a catastrophic health insurance scheme3.

These schemes are usually not adequate to pay for the full costs of medical treatmentand individuals invariably end up paying out of their own pockets, with these out-of-

pocket expenses accounting for a significant proportion of total costs (Addendum A).

In absolute terms total healthcare expenditure in Singapore rose from $0.1 billion in1961 to $5 billion (at 2002 market price) in 2001, and government healthcareoperating expenditure rose from $0.05 billion to $1.2 billion (at 2002 market price) in1961 and 2001 respectively.

From the mid-1980s onwards, the government healthcare expenditure has consistentlyhovered around 1% of GDP, down from the approximately 2% it spent before 1980.The graphs

4below give the healthcare spending trend over the years 19602001:

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As can be seen from the graphs, government spending over the years, despite risinghealth costs, an ageing population, more chronic illnesses, has actually not only notkept pace with inflation nor remained constant, but actually fallen, in relation to totalhealthcare expenditure (50% in 1965 to 20% in 2001) and as a percentage of GDP.

This means that more people are paying more for their healthcare out of their ownpockets, whilst the government has been subsidizing less.

Government expenditure on health, as a percentage of total expenditure on health,declined from 41.6% in 1998 to 30.9% in 2002!

As a percentage of GDP, government health spending fell below 1% from 1986 -2001 (Figure 5).

In 2007 and 2008, the government expenditure expenditure on healthcare was 0.8%and 1% of GDP respectively.

In his budget speech in 2007, then Finance Minister Lee Hsien Loong stated: theGovernment will be ramping up our healthcare expenditure over the next five to 15

years. Over the next five years alone, we expect to increase spending to reach about$3 billion a year by 2012, compared to $2 billion today.5

However, by 2009, healthcare costs had increased exponentially, and Governmentspending on healthcare had already reached about $ 3.63 billion/year or about $1000

per citizen/PR, although it remained at only 1.3% of GDP, a figure that was repeatedin 2010

6.

Private healthcare spending in 2009 was about S$8 billion/year or about $2000 percitizen/PR (2.8% of GDP).

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Percentage Spending in Budget 2011 by Ministries versus 10-year Average7

For Budget 2012, the Singapore Government has budgeted Government healthcareexpenditure with a slight increase, although this is projected to reach $8 billion overthe next five years. In per capita terms, the overall expenditure will still remain thelowest among developed economies

As a percentage of the total budget, government healthcare spending has remained atabout 6% over the past ten years, rising to 8% in the 2011 budget. This is comparedto a 25% spending on Defence.

Healthcare Indicators

The insufficient Government investment in healthcare over the years has resulted ininsufficient hospital beds to serve the population and over-crowding of publichospitals, with newspaper reports of patients lying in beds along corridors of hospitalwards. This over-crowding was relieved to some extent with the completion of a new

550-bed hospital (the Khoo Teck Puat Hospital) which took over the bulk of patientsand staff from Alexandra Hospital in 2010. This is the first major new public hospitalto be built by the Government in more than a decade. However, there are to date stillmany reports of long waits for appointments and long waits at the Accident &Emergency Department, as well as for available beds.

A recent report8

has noted that, in the week before the report was published, four ofthe six restructured hospitals had more than 85 per cent of their beds occupied onmost days. The exceptions were Singapore General Hospital (SGH), with occupancyrates hovering at 84 per cent, and Alexandra Hospital (AH), where more than one infour beds remained empty. At Changi General Hospital (CGH), bed occupancy

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topped 95 per cent for significant periods. Khoo Teck Puat Hospital had occupancy ator above 90 per cent on a significant number of days

8.

Former Health Minister Khaw Boon Wan had been reported as saying that publichospitals should have average occupancy rates of 85 per cent for maximumefficiency

8. Private hospitals generally work on rates of 70 per cent or below for

patient safety and to ensure surge capacity.

Currently there are 21 hospital beds per 10,000 resident population, less than half theaverage number of 58 beds in high-income countries. Other indicators also showSingapore lagging far behind, for example, 17 doctors per 10,000 populationcompared to an average of 30 doctors in other high-income countries, and 54 nursesand mid-wives versus their 100.

Table 1: Selected Health Input Indicators in 2009 (Per 1000 Population)

Singapore UK US OECD

Doctors 1.7 2.7 2.4 3.0

Nurses 5.4 9.8 10.7 10.0Hospital Beds 2.08 3.3 3.1 5.8

Source: Singapore Government statistics13

& OECD 20119

Singapore has allocated comparatively lesser resources to healthcare than otherdeveloped countries. Nevertheless our health outcomes like life expectancy and infantmortality have been comparable to these countries. This does not mean that we canconclude that we can get a healthy population in spite of our low healthcareexpenditure. This is because our population is still relatively young, we have a smallgeographical area where accessibility to healthcare facilities is not a major problem,and we do not have a rural population.

Singapore Healthcare: A Broken System?

Former Health Minister Khaw Boon Wan, current Health Minister Gan Kim Yong,and other Government officials have consistently defended the Singapore HealthSystem, with its 3Ms (Medisave, Medishield and Medifund) as being efficient,affordable and the envy of other countries.

However, we continue to hear of Singaporeans being unable to afford treatmentespecially when their health concerns are major and require long-term assistance. Fora country that boasts of such high GDP, such a situation is unacceptable.

In a study done in 200710

, hospital bills of 30 thousand admissions to a restructuredhospital of patients above 64 years old were analysed. The results are worrying:

Only 25% of bill amounts were subsidized

55% percent used Medisave accounts for payment; of these 51% had theirbills paid from Medisave accounts of family members

Majority of their CPF accounts fell short of the minimum sum; average

Medisave balance was only $5300 at time of admission

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Only 22% had MediShield coverage; of those 80 -85 years old only 8.4%were covered; those above 85 (limit of MediShield coverage) had no coverage

Only 8% had private insurance

Only 0.9% had Medifund assistance approved

Statistician Leong Sze Hian has listed a large number of less than satisfactoryoutcomes as result of our current system of healthcare

11:

About 21 per cent of Singaporeans who sought financial counselling from CreditCounselling Singapore had to do so due to medical costs;

The zero increase in total hospital beds over the last decade in relation to the surgein population;

A 99 per cent unsuccessful rate (or 1% success rate) for patients applications to

downgrade to lower classes of hospital rooms;

The last available disclosed statistic from the Chairperson of the GovernmentParliamentary Committee (GPC) on Health was that 750,000 people had no form ofmedical insurance;

Public hospitals average hospitalisation bills have increased by as much as doubleover the last four years;

$86 million of Medifund surpluses were transferred to the protected reserves,instead of allowing Medifund usage for the needy at Polyclinics;

A refusal to disclose Medifund applications success rates on a patients rejectedbasis, instead of total applications basis;

A refusal to make public the criteria for approving Medifund applications;

Longer and longer waiting times for practically all types of subsidised medicaltreatment up to a year for dental;

About half of Medisave account holders Medisave being consumed for otherfamily members thus creating the likely future problem of insufficient funding for

account holders as they grow older; and

No transparency in the funding to public hospitals vis--vis the subsidies shown inpatients hospital bills.

Clearly, the system is in need of a serious rethink.

Recent Healthcare Changes Too Little, Too Late?

Since becoming health minister in June 2011, Mr Gan Kin Yong has introduced a

number of changes to the current healthcare system, including

12

:

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1. Extension of the Primary Care Partnership Scheme (renamed Community HealthAssist Scheme

13) to more needy citizens (the qualifying age limit has fallen from 60

and above to 40 and above; qualifying per capita household income has increasedfrom $800 and below to $1500 and below). This scheme provides limited governmentsubsidy for acute illness as well as certain chronic illness visits at private general

practitioner (GP) clinics, and is expected to shift the patient load away fromgovernment polyclinics to private GP clinics.

2. Higher Medisave withdrawal limits for outpatient treatment of chronic illnesses(from S$300 to S$400/year).

3. Palliative care to be made available at more hospitals.

4. Drug subsidies to be increased at polyclinics and public hospitals.

5. Public hospitals to lease space from private hospitals to address bed shortages atpublic hospitals.

6. A number of nursing homes to move to improved premises.

7. More community health centres to support private GPs. These centres providescreening, nursing and counselling services not provided by GPs.While a number of these changes are certainly steps in the right direction, thesechanges remain piecemeal, in certain cases no more than stop-gap measures to propup an ailing and out-dated healthcare system. They certainly do nothing to address thefundamental flaws in our current system.

Minister Gan has also so far not addressed the issue of insufficient spending anddevelopment of healthcare infrastructure, services and manpower, especially forsecondary and tertiary care. Waiting lists for specialist outpatient appointmentsremain very long, and our hospitals remain chronically short of beds.

Budget 2012

In his Budget Speech50

on 17 February 2012, Finance Minister TharmanShanmugaratnam announced the following with regards to the healthcare sector

50,51:

1. Total Government Healthcare Spending

To be doubledover the next five years, from the current $4 billion a year, to $8billion by 2017.

2. Infrastructurea. acute hospitalcapacity will be increased by about 30%, or 1,900 beds by 2020.

b. community hospitalcapacity will be increased by 1,800 to double that ofcurrent capacity.

c. capacity in long term care services to more than double by 2020, includingthat for nursing homes, home-based health and social care services, day careand rehabilitation facilities, and Senior Activity Centres.

d.primary & secondary care - access to polyclinics to improve, new models ofcare, such as Medical Centres that provide specialist outpatient services in the

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community to be introduced.

3. Extra healthcare subsidies for residentsa. community hospitals

- lower-income patients will receive a 75% government subsidy,- those above the median income, who previously did not receive any

subsidy, will now receive 20% - 50% subsidy.b. nursing homes, day care and rehabilitation facilities and home-based care

- two-thirds of Singaporean households will qualify for subsidies, includingabout 80% of elderly

- extra $120 grant per month to help families who hire foreign domestic helpersto care for an elderly member at home (on top of current $95).

- $2000 subsidy for elder-friendly home modifications such as grab bars andanti-slip treatment for bathroom tiles

- full GST absorption extended to subsidised patients in the long term caresector

c.Medisave, Medifund & MediShield

- $600 million top-up to Medifund- MediShield coverage to extend from age 85 to 90 with a view toextending coverage to people who suffer from congenital conditions

- one-off Medisave top-up to all Singaporeans currently on MediShield tocover expected increase in MediShield premiums

A significant number of these changes are steps in the right direction that deservestrong support, especially those with regards to infrastructure expansion, and elderlyand long term care.

There are however concerns about the practicality of these suggestions in the light of

the manpower shortages in public facilities, the persistently preserved differentialmeans-testing for acute hospitals versus intermediate and long term care facilities andthe dependence on voluntary welfare organisations or private corporations for

provision of intermediate and long term care.

After decades of controlling government healthcare spending at about 1 percent ofGDP (government healthcare spending was actually below 1% GDP from 1986 2001), the government has finally realised that this is unsustainable. A commitment todouble healthcare spending to $8 billion by 2017 represents a significant change inmindset of the government.

A large part of this spending would appear to be towards infrastructure investmentalone. To increase acute hospital beds by 1900 would be equivalent to building anextra 3 mid-sized 600-bed hospitals, which would cost upwards of $700 millioneach

3. Together with an additional 1800 community hospital beds, as well as

expansion of the intermediate and long term care sector infrastructure, these changesalone will cost the government upwards of $6 billion over the next five years. This islikely to consume a significant proportion of the projected increase in governmenthealthcare financing over the next five years.

When we take into account the expected increase in healthcare running costs due toinflation as well as the extra expanded infrastructure and manpower running costs, wecan expect healthcare to cost significantly more for the man in the street.

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It is unfortunate that this budget and the government has still not adequatelyaddressed the important issue of spiralling healthcare costs, and the increasingunaffordability of healthcare in Singapore for the common man.

In this respect, the 3Ms have proven to be woefully inadequate in rising to the twinhealthcare challenge of escalating costs and increasing unaffordability. As a forcedself-funding scheme without any risk-pooling, Medisave is not effective in fundinghealthcare in the long term, especially for catastrophic illness and chronic diseasemanagement. Indeed, many of the current generation are depleting their ownMedisave to pay for their dependents medical expenses. The numerous exclusionsand restrictions in Medishield make it a less-than-comprehensive insurance scheme,while Medifund in practical terms is accessible to only a very small proportion of the

population on account of its onerous criteria.

Addressing these fundamental issues would require a fundamental change of mindseton the part of the government, as well as the political will to radically overhaul ourcurrent flawed 3M healthcare financing model and rationalise our currently

fragmented CPF account structure.

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II. SINGAPORE DEMOCRATIC PARTY HEALTHCARE PLAN

A. HEALTHCARE INFRASTRUCTURE AND MANPOWER INVESTMENT

PROGRAMME

There is an urgent need to increase the number of hospital beds, doctors, nurses andother healthcare personnel to the levels of the high-income countries of the developedworld. The government must have the political will to urgently embark on thenecessary spending to adequately develop these infrastructure and manpower needs.

In 2009, there were 10 387 acute hospital beds in 22 hospitals and specialty centres,of which the 14 public hospitals and specialty centres accounted for 81.4% or 8 456

beds12

. Khoo Teck Puat Hospital, which opened in 2010, after 6 years of planning andbuilding, adds 550 beds, while an uncertain number of beds were removed from theold Alexandra Hospital. Ng Teng Fong hospital (700) beds, will only beoperational in 2014

14, and Seng Kang Hospital (500 600 beds) will only be ready in

201815

.

These are very long lead times, considering that Mount Elizabeth@Novena, a $2billion 333 bed private hospital was built in just 3 years

16.

Even with the addition of these 3 new hospitals, the total number of acute hospitalbeds will increase by only 15%, bringing the number of beds per 100 000 populationto 2.39, still way short of what is needed.

Tan Jee Say in his paper Creating Jobs and Enterprise in a new Singapore economy Ideas for Change

3has suggested that Singapore needs to roughly double the number

of hospital beds, doctors, nurses and other healthcare professionals over the next 5

years. He estimates that a modern hospital in Singapore costs an average of $1.27million per hospital bed to build, so the government will need to spend $10 billion todouble the number of hospital beds in public hospitals. There is scope for privatehospitals to also increase their number of beds.

There is also an urgent need for the government to increase the number of healthcare personnel including specialist doctors, nurses, pharmacists, laboratory staff,technicians and technologists, as well as administrative support staff. This should not

be done primarily via recruitment of foreign staff, who bring with them their own setof problems, especially difficulties of adapting to the local culture, as well ascommunication problems with older patients. The pool of local healthcare

professionals should be enlarged by increasing the intake of medical, nursing andother healthcare students at the tertiary level or by making it easier for privatespecialists and general practitioners to serve in public hospitals. Post-graduatespecialist training should also be advanced.

Specialist training especially procedure-based specialties like surgery depends inlarge part on patient load. More specialists cannot be trained if we do not have morehospitals and patients to train on. The current surgery training program is alreadystretched to the maximum. This is can only be overcome if the new hospitals actuallystart taking in new patients or if trainees are allowed to work under supervision in

private hospitals.

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Attrition rates of doctors and other healthcare specialists from the public sector willalso have to be seriously looked into, to minimise the loss of personnel to the privatesector. Alternatively, equitable solutions must be considered to allow private

practitioners to look after patients in public hospitals.

To do all this, the government must be willing to urgently commit sufficient financialresources to support these infrastructural and manpower expansion programmes.These sums will be large, as all investment in infrastructure tends to be. There mustalso be the political will to see these programmes through, even if it means running atemporary deficit budget. With the upcoming recession, investment in these

programmes will serve to stimulate the economy and provide gainful employment forSingaporeans.

We propose that an amount of $1.5 billion a year be budgeted to carry out theseprogrammes.

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B. HEALTHCARE ISSUES

Singapore's healthcare system and the financial system that underpins it are comingunder increasing strain from Singaporeans who find it harder and harder to affordhealthcare especially when they require prolonged hospitalisation.

There must be a rethink of our healthcare system if we are going to provide thepeople with affordable and efficient medical care.

First, universal healthcare must be the raison d'etre of a developed nationshealthcare system. That is, legislation must be enacted to ensure that every singlecitizen is covered by a basic healthcare policy regardless of age, employment status orgender.

Second, whatever amount each citizen contributes to the national healthcare plan asan annual payment, as well as out-of-pocket expenses, must always remainaffordable.

Everything we discuss about healthcare reform must spring from and be underpinnedby this fundamental principle of universal, affordable coverage.

Affordability versus choice

The main bugbear of many universal healthcare systems is that citizens are presentedwith a Hobson's choice: Affordable but low-quality healthcare in run-down stateinstitutions or high-quality care in unaffordable private institutions.

This need not be the case. We can, and should, introduce a healthcare model with

universal healthcare coverage that allows the patient to choose his or her healthcareprovider public institutions, partially subsidised private facilities, private institu-tions but the plan will only pay up to the official tariff.

Additional flexibility is ensured by allowing private insurers to sell supplementaryinsurance to those who want a higher level of service.

Funding Models (Addendum A)

Australia, Canada, the Nordic countries, United Kingdom and, closer to us, Taiwanhave a single-payer system, whereby healthcare for the entire population is financed

from a single pool to which several parties the state, employers, employees havecontributed.

Contributions from citizens and residents to this pool are collected by way of a flattax or premium paid to the state. The government administers and disburses fundsfrom this pool to finance healthcare services for the population.

An alternative model is the multi-payer model used in Switzerland, Holland andGermany, where healthcare is financed both from a public pool run by thegovernment and private insurance. Under this system, everyone is mandated bylaw to buy basic health insurance from any of a group of nationally appointed privateinsurers. These insurance plans are provided on a not-for-profit basis.

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The premium is standardised for a particular policy regardless of age and is paid out-of-pocket up to a fixed percentage of income; the government tops up the rest. For theunemployed, infirm, aged and handicapped, the government pays the entire premium.A deductible as well as a co-payment fee is charged per treatment.

The single-payer model is easy to implement and administer, but it may involve moregovernment bureaucracy in the long term at taxpayers' expense.

The multi-payer model has the advantages of requiring less government with acorrespondingly lower burden on income taxation, and providing a choice of plans forthe people. Providing the government audits and regulates the insurers strictly, privateinsurers may provide sounder actuarial risk management than the state and at thesame time act as a check on healthcare providers to minimise unnecessary treatmentsand prescriptions of expensive drugs.

However, the downside is that premiums tend to rise over the years as insurersstruggle to cope with burgeoning healthcare costs.

And detailed comparative study of the healthcare systems in various countries isincluded in Addendum A.

Private InsuranceBased or Government-Run?

As has been noted, healthcare can be financed in three major ways:

1. The State pays everything through taxes2. The individual pays for his own care.3. The State pays some, the individual pays some and some kind of insurance pays

the rest.

It obvious we cannot achieve universal healthcare by having the individual self-finance his or her own healthcare. The poor and those who are hit with a catastrophicillness would not be able to afford the fees.

Neither can we have a system that is totally private insurance-financed. This bringsthe problem of moral hazard where payers may have no incentive to economise onconsumption of healthcare services, and some individuals may even choose toconsume health resources or lose the incentive to try to keep healthy by avoiding

potentially unhealthy habits. In reality, because of the asymmetry of information, it is

more likely that providers are going to raise their charges to the limit of insurancecoverage and to encourage patients to purchase services to the maximum of theirentitlements. It also has the problem of adverse selection where cover is denied tothose who are at higher risk.

Our Health Service has practically been running in Singapore for 50-plus years,relatively efficiently with limited insurance coverage. Even today, the insurancecomponent in secondary and tertiary healthcare is negligible - only MediShield and

private Shield plans, mandated by the government. According to the governmentreport to the WHO, in 2010 the insurance component of total healthcare spendingmade up only 2.8%

2.

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Without any significant insurance input in our Health Service, we have managed tohave comparatively high standards of healthcare at a low GDP rate (below 5%). Thisis partly artificial because of the relatively young population and the lack of accuratedata on the complementary and alternative sector.

Accountability is already relatively high but could be improved especially in thedirect costs of various services. The current model of administering government/restructured hospitals will continue, up to and including the generation of invoicesand bills for all procedures. These invoices will be used to compare cost-effectivenessand manpower/productivity requirements. This is to ensure accountability, not tomake any profit.

However, the key performance indicators will be radically changed as administratorswill now see the overall mental, social and physical health of the residents living intheir catchment area as the primary outcome that determines their performance.Hospitals will compete against each other in terms of how well they can take care ofthe health of the population covered rather than in media coverage of new and more

expensive services, cost recovery from patients or profits generated.

Since there is currently a negligible insurance component in our current healthcaresystem, and there is no track record of insurance companies being able to run oradminister our healthcare system in a more effective way, private insurancecompanies will continue to concentrate on those who want additional services not

provided under the National Healthcare Programme.

C. PROPOSED NATIONAL HEALTHCARE PROGRAMME

We need to establish a system where every single citizen is covered by a basic

healthcare policy to which the government and the people contribute, and which mustremain genuinely affordable.

To achieve this we suggest a single-payer universal healthcare system in which thegovernment manages a central health investment fund. This fund will be run along thelines of a government-subsidised public insurance scheme to finance compulsory

basic health, accident and pregnancy (for women) coverage for all citizens andpermanent residents (PR) residing here for more than 6 months a year. No one may berejected or excluded from this basic plan on the basis of age, gender, or state ofhealth. The usual exclusion clauses will apply: non-essential surgery, dental,alternative medicine, aesthetic treatment. The government subsidy in our plan should

not be seen as a handout per se, but as a contribution by the community via taxestowards healthcare investment.

The annual government healthcare expenditure was just under $4 billion in 2009, orabout 1.4% of GDP

2. Based on a total annual healthcare spending of $12 billion in

20092, the Government's portion is about one-third.

This expenditure should be increased to about $10.5 billion annually immediately onpassage of the legislation and be paid into the central health investment fund.Singaporeans/PRs will contribute the remaining $2 billion (or about $500 per personon average) yearly, making the gross government to private healthcare spending ratioof 84:16.

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This healthcare fund will be named the National Health Investment Fund and be usedto operate both public and private (in part) healthcare institutions as well as pay forall healthcare services.

Singaporeans/PRs' annual contributions to the National Health Investment Fund willbe deducted from every resident's CPF or bank account. For those who cannot affordto pay the annual premium, the Government will subsidise the payment in part or infull.

Cost-containment, co-payment, additional private healthcare spending will ultimatelyalter this ratio, decreasing the government part, and increasing private spending,approaching 80:20 or 75:25. This brings the ratio closer to the era which saw thehighest gains in healthcare in Singapore in the 1950s and 1960s.

Revenue for Government spending on Healthcare (Addendum B)

We propose several sources of revenue to make up for the extra $6.5 billion in

government spending on healthcare:

1. Spending on defence should be reduced to those nearer that of other smalldeveloped nations ($5.75 billion).

2. Because the burden of spending on healthcare under the plan has shifted fromprivate enterprise to the government, we proposed a slight increase in thecorporate tax rate ($1 billion).

3. A luxury tax on luxury items ($1.85 billion).4. A tax on foreign buyers of local properties ($200 million).5. Spending from the revenue of the Tote Board will be recalibrated to focus

more on healthcare and other social welfare programmes as priority areas.

6. A larger dividend payment from earnings from our past reserves should bemade available for use on social programmes including healthcare.

In addition, the cost of healthcare will be reduced by about $300 million byabolishment of GST on healthcare services provided under the National HealthcarePlan.

These topics are discussed in detail in Addendum B.

Contribution to the National Health Investment Fund (NHIF)

The individual contribution to the National Health Investment Fund works as in aninsurance system, where individual risks are pooled. The individual pays a regular

premium when he does not require the service so that his payment will not beoverwhelming when he requires it.

Why has this model been chosen? We can easily do away with the individualcontribution, increase taxes in other areas, and just implement a co-payment system atthe point of care to avoid abuse.

Among other reasons, the individual contribution is there to make healthcarespending a part of the consciousness of the public. A large number of young andhealthy will not have healthcare spending on their minds. They are vulnerable to

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providers who try to sell alternative healthcare, dubious health supplements, aesthetictreatments or private healthcare insurance that might not be to their benefit.

In addition, having everyone make an annual contribution helps promote the idea of aco-operative where I am paying for the care of my neighbours sick parents

because he or she is my neighbour and we are Singaporeans. This is fundamental.

Also, if total healthcare cost increases, this individual contribution will increaseaccordingly. This is very transparent, and everyone thus has a stake to keephealthcare costs low.

Several alternative schemes were considered for the individual contribution to theNational Health Investment Fund.

A scheme similar to Australias where a proportion (12%) of the individual annualtaxable income was considered. A scheme such as this would be redistributive as therich would contribute more than the poor.

However, this scheme would be based on taxable income, and currently, only about1.9 million citizens/PRs have assessable incomes

17. With the average income at

$408916

, and taking into consideration the various deductions, it is estimated that a1% contribution would amount to a sum of $700 million (Addendum C).

Various means were considered to redress this shortfall, but eventually, a fixedamount for the individual contribution was chosen for administrative ease and, forreasons of equity.

For a healthcare system to be equitable and afford universal coverage, it is a given

that the young and healthy will 'subsidise' the old and sick, and they in turn will be'subsidised' by the young and healthy when they grow old. Having a tiered feestructure may result in inadvertent discrimination: the really sick are usually the oneleast able to afford higher premiums or taxes because they are more likely to beunemployed (or partially employed) and/or are old and indigent.

In our universal healthcare model, government and private healthcare spending isapportioned in the ratio of about 83%:17%. The 17% will come from the individualcontribution, while the 83% will be financed primarily by income and other taxes.

Quantum of Individual Contribution to the NHIF

We propose that PRs should pay a slightly higher quantum of contribution. Lowerincome earners should pay a lower premium. The government will fully subsidisethose who cannot afford to pay the premium.

To encourage procreation, and to reduce the burden on families with children, thequantum paid by those below 18 will be lower.

The table below sets out the quantum of payment by an individual to the healthinvestment fund:

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Table 2: Individual Contribution to the National Health Investment Fund

Adults Singaporeans Permanent Residents

- Single: Income >$1500- Married: Total family income

a>$3500

$600 $700

- Single: Income $1500 - >$800

- Married: Total family income

a

$3500 >$2000- Full-time Tertiary Students: Parentscombined income >$3500

$300 $400

- On Unemploymentb

or Social Welfareb

benefits- Single: Income $800c

- Married: Total family incomea$2000

c

- Full-time Tertiary Students: Parentscombined income $3500

c

Full subsidy Full subsidy

a. Combined income of husband &wife.

b. Under proposed SDP benefit schemes.c. Subject to restrictions under SDP benefit schemes and the FS schemes.

a. Subjected to conditional restrictions under SDP benefit schemes and the FS scheme whereapplicable

Based on available demographic and income distribution information, this wouldresult in an average contribution rate of approximately S$427 per person and a total

contribution by all Singapore residents of approximately $1.31 billion to the NationalHealth Investment Fund (Addendum C).

This is matched by a contribution from the government of $10.5 billion from thehealthcare budget.

The contribution rate for a family of 4 (parents and 2 children), based on theindividual contribution rates above, will range from $1800 to $0 depending on totalfamily income.

Table 3: Monthly Contribution Rates for a Family of 4*

(Compared to Current Medisave Contribution)

Total familyincome

National Healthcare Plan Current Medisave

Annual

Contribution

MonthlyContribution

% ofEarnings

Annual

Contribution

MonthlyContribution

% ofEarnings

>$4000 $1800 $150 3.750% >$3360 >$280 7% 9.5%$4000 - >$3500 $1500 $125 3.571% >$2940 >$245 7% 9.5%$3500 - >$3000 $900 $75 2.500% >$2520 >$210 7% 9.5%$3000 - >$2000 $600 $50 2.500% >$1680 >$140 7% 9.5%$2000 $0 $0 0.000% $1680 $140 7% 9.5%

* For Singaporeans. PRs will pay a slightly higher rate as published.

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Minors Singaporeans Permanent Residents

Parents combined income >$4000 $300 $400

Parents combined income $4000 - >$3000 $150 $200

Parents combined income $3000a

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In all cases, the total contribution paid out by a family is less than 4% of total familyincome. This compares to the current contribution rate for individuals for Medisave,which is between 7 - 9.5% of total income depending on the persons age (AddendumD).

For citizens/PRs working overseas, it will be mandated that those who reside in thecountry for at least 6 months in a calendar year will pay the full contribution amount.This is in line with tax residency rules in Singapore and major developed countrieswhich regard a person as a tax resident if he resides or works in a country for morethan 6 months a year. For those who are within the country less than 6 months a year,they will decide at point of utilisation of service whether to pay the unsubsidisedamount incurred, or to pay the annual contribution amount plus the subsidised amountincurred. There will be no pro-rating of the annual contribution quantum.

For PRs who become citizens, a minimum period of at least one year citizenship isnecessary before they qualify for the citizen rate.

We have decided to include PRs in the scheme because of their presence here in largenumbers and their substantial consumption of healthcare services. In addition,providing healthcare coverage to PRs is a tacit recognition and affirmation of thesignificant social and economic contributions they have made to Singapore.

Collection of Contribution

The contribution will be collected in a variety of ways:

a. For active CPF account holders, the amount can be deducted from their CPFaccounts.

b. For the self-employed, homemakers or retirees with income, the amount can bededucted by GIRO from their bank accounts or from CPF accounts of their workingspouse.

c. For children, the amount may be deducted from their baby-bonus account or byGIRO from their parents bank account.

The amount will be deducted monthly from the respective accounts. This works out to$50 per month for those paying the full rate, and $25 per month for those paying thehalf-rate. The equivalent amounts for PRs are $58.33 and $33.33 respectively.

To ensure minimal default of contribution, especially for the self-employed, thegovernment might impose additional clauses on all renewal of trade or businesslicences, professional practice certificates, that the healthcare fund contribution must

be up-to-date before issuance of these licenses or certificates. For children of school-going age, their contribution will similarly have to be up-to-date.

National Healthcare Benefits Card

Upon payment of the annual contribution, each resident will receive a NationalHealthcare Benefits Smart Card.

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This Card entitles the holder to a 90% subsidy on the majority of their healthcarespending (excepting acute illnesses).The Smart card may be used at all polyclincs, GP clinics, all private and publicspecialist clinics and hospitals that participate in the programme.

The smart card will contain information on payment and utilisation history, and wellas important medical information, including allergies, major medical conditions, aswell as the current medication the patient is on.

Co-payment

We propose that a co-payment fee of 10% be charged for medical services at thepoint of utilization to discourage over-consumption, up to a cap of $2000 per year.This co-payment fee will be paid out-of-pocket by the healthcare user or by optional

private insurance.

The 10% co-payment will apply for all medical services including hospitalisation,

drugs, investigations, surgeries, with the exception of:

a. acute self-limiting illnesses seen at the primary and secondary care level e.g.normal coughs and colds, gastroenteritis. For these visits, a fixed subsidy of $10 pervisit applies. This will be drawn down from the National Health Investment Fund.

b. non-essential healthcare items under the exclusion list, including aesthetictreatment, dental treatment, health supplements (the full list under heading ExclusionList).

Table 4: Co-payment amounts at point-of-use under the National Healthcare

PlanCo-payment amount

Items under the Exclusion List Full payment

Acute self-limiting illnesses at Primary andSecondary Care Level (Including at A&E)

$10a

All other illnesses at Primary and Secondary CareLevel including all procedures & investigations

b.

10% of billa

All illnesses at Tertiary Care Level 10% of billa

a. Those under the Additional Partial Subsidy (APS) & Full Subsidy (FS) Schemes will receiveadditional subsidies. Please refer to section: Details of Additional Healthcare Plan Subsidies.

b. Excepting non-directed health screening and those for medical examinations

For the purpose of calculation of the total bill size, a table of standardized tariffs willbe drawn up for all consultation charges, diagnostics and therapeutics, and wardcharges. These charges will be reviewed on a regular basis in consultation with the

profession and the public. The current means testing for medical subsidies will beabolished.

Where healthcare services are provided by private hospitals, the medical bill will bepaid for by the plan at the rates specified for public hospitals. The difference will be

topped up out-of-pocket or by optional private insurance.

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Capping

Despite the 90% subsidy, there will be instances when the out-of-pocket payment byan individual can reach quite substantial amounts. Major operations includinghospital stay can reach $100,000. Because of this, we propose a cap of $2000 percalendar year in co-payment amount.

For the purpose of assigning year of capping, the date of invoice will be used.

Table 5: Co-payment capping per year

Capping per year

All illnesses/treatment excepting thosespecified in Table 6.

$2000a,b

a. Those under the Additional Partial Subsidy (APS) & Full Subsidy (FS) Schemes with receiveadditional subsidies. Please refer to section: Details of Additional Healthcare Plan Subsidies.

b. Excludes acute self-limiting illnesses.

For chronic illnesses that require expensive continuous or recurrent treatment, forexample, dialysis treatment, chemo or radiotherapy, stroke treatment andrehabilitation, even the $2000 per year cap can represent a significant outlay overtime.

For these illnesses, we propose a cap of $2000 in the first year of treatment, $1000 inthe second, and $500 thereafter.

Table 6: Capping amounts for chronic illnesses requiring expensive continuous/

recurrent treatment.

Capping per yeara,b

First year of treatment $2000

Second year of treatment $1000

Third and subsequent years of treatment $500a. For particular illness and treatment. Overall cap remains.

b. Those under the Additional Partial Subsidy (APS) & Full Subsidy (FS) Schemes will receiveadditional subsidies. Please refer to section: Details of Additional Healthcare Plan Subsidies.

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Details of Additional Healthcare Plan Subsidies

Despite the substantial reduction in healthcare spending for the general populationunder the proposed National Healthcare Plan, certain groups of people will requireadditional help. To this end, we propose that the following groups of Citizens/PRsreceive additional subsidies under the Healthcare Plan:

Table 7: Details of Additional Subsidies under the National Healthcare Plan

Beneficiaries Subsidies

Additional Partial Subsidy (APS) Scheme

Adults- Single: Income $1500 - >$800- Married: Total family income $3500 >$2000- Full-time Tertiary Students: Parents combined

income >$3500Minors- Parents combined income >$3000

1. Annual Contribution: $300 ($150 forsome minors)

2. $20 subsidy per acute illness visit.3. 10% co-payment for chronic illnesses.

Cap per year of $500.4. Chronic illnesses requiring expensive

continuous/recurrent treatment:

Full Subsidy after 1st year.Full Subsidy (FS) Scheme

Adults- On Unemployment

aor Social Welfare

abenefits

- Single: Income $800b

- Married: Total family income $2000b

- Full-time Tertiary Students: Parentscombined income $3500

b

Minors- Parents combined income $3000

b

1. Annual Contribution: Full subsidy.2. All acute and chronic illness medical

treatment: Full Subsidy.

a. Under proposed SDP benefit schemes.

b. Subject to restrictions under SDP benefit schemes and the FS scheme.

Note: For persons under the APS and FS schemes, the additional subsidies only applyif the person utilises government healthcare services or private healthcare services atthe primary care level. These additional subsidies do not apply if the person utilises

private healthcare services at the secondary or tertiary care level.

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Table 8: Summary Table of Payment Schemes under the National Healthcare PlanAdults Scheme Annual Contribution Copayment Annual Cap

Singaporean PR Acute Illness Chronic Illness Chronic Illness Chronic Illnesses

requiring

Expensive Long

Term Treatment

- Single: Income >$1500- Married: Total family income >$3500

Normal $600 $700 $10 Subsidyper visit

10% $2000 $2000 1st Year.$1000 2nd Year.$500 subsequently.

- Single: Income $1500 - >$800- Married: Total family income $3500 >$2000

- Full-time Tertiary Students: Parents

combined income >$3500

APS $300 $400 $20 Subsidyper visit

10% $500 $500 1st Year.Full subsidysubsequently.

- On Unemploymenta or Social Welfarea

benefits- Single: Income $800- Married: Total family income $2000- Full-time Tertiary Students: Parentscombined income $3500b

FS Full subsidy Full subsidy Full Subsidy Full Subsidy Full Subsidy Full Subsidy

a. Under proposed SDP benefit schemes.b. Subjected to restrictions under SDP benefit schemes and the FS scheme.c. For particular illness and treatment. Overall cap remains.

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Minors Scheme Annual Contribution Copayment Annual Cap

Singaporean PR Acute Illness Chronic Illness Chronic Illness Chronic Illnesses

requiring

Expensive Long

Term TreatmentParents combined income >$4000 APS $300 $400 $20 Subsidy

per visit10% $500 $500 1st Yr.

Full subsidysubsequently.

Parents combined income $4000 ->$3000

$150 $200

Parents combined income $3000b FS Full subsidy Full subsidy Full Subsidy Full Subsidy Full Subsidy Full Subsidy


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Exclusion List

The following are excluded from subsidy under the National Healthcare Programme:

Dental care/orthodontics/dental appliances Aesthetic healthcare Cosmetic procedures Weight loss medication (except for those with BMI above 27.5, or 25 in those withco-morbidities)

Fertility treatment outside of government approved programmes Contraceptives Health supplements Medical examination for pre-employment, vocational, fitness and insurance reports,including accompanying investigations these should be covered by employers

Non-directed health screening All investigations, medications, implements and devices (e.g. crutches, wrist guards)not prescribed by a doctor, occupational or physiotherapist

Expensive medical devices for self-use e.g. dialysis machines

Private nursing charges Experimental procedures or treatments - these should be covered in clinical trialprotocols

Alternative healthcare Work injuries and accidents (these will be covered by the respectiveinsurance programmes)

Vaccinations not recommended under the National Vaccination List

The 3Ms (Medisave, MediShield and Medifund)

It is obvious that the proposed healthcare plan will make redundant the Medisave and

MediShield schemes which even now do not really aid in the running of an efficientand economical healthcare system.

Medisave

In spite of the implementation of the Medisave scheme, about 21 per cent ofSingaporeans who sought financial counselling from Credit Counselling Singaporehad to do so due to medical costs

11.

Up to half of Medisave account holders Medisave are being consumed for otherfamily members

11 thus creating the likely future problem of insufficient funding for

account holders as they grow older.

A study done in 2007 found that the majority of aged patients admitted to a publichospital had CPF accounts that fell short of the minimum sum, and the averageMedisave balance was only $5,300 at time of admission

10.

In the same study, an analysis of thirty thousand hospital bills of aged patients whowere admitted to a re-structure hospital in 2007, it was found that 5% (or 1500) wasabove $8,000 and 1% (or 300) was above $19,000. Seven cases had bills above$100,000, and the maximum bill size was above $200,000!

Healthcare costs have almost doubled since then, and these bill sizes will be likely beeven larger today.

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It is clear that Medisave is an out-dated concept. It is essentially a camouflaged formof self-financing scheme. Like all self-financing schemes, a single catastrophic illnessor major operation is enough to wipe out an individuals Medisave many times over.Even its highly publicised goal of forcing individuals to take responsibility for theirown health is negated by allowing family members Medisave accounts to be drainedfor individual needs.

With the implementation of the National Healthcare Programme, Medisave will nolonger serve a purpose. The Medisave scheme will be abolished, and all Medisavemonies returned to the individuals CPF Ordinary Account, where they can be usedfor other purposes, and withdrawn at retirement age.

MediShield

The total amount of premiums collected for this government insurance scheme run bythe CPF Board was $ 372.13 million a year in 2009

18. It is a catastrophic illness

scheme meant to provide coverage for large hospital bills, as well as out-patienttreatment bills for certain illnesses, such as kidney dialysis, chemotherapy and

radiotherapy for cancer treatment. It covers up to 80% of these bills at C or B2 class.

For coverage at B1 class or higher, one would have to turn to one of the 5 Medisave-approved private Integrated Shield Plans on top of MediShield. MediShield also onlycovers up to 85 years old*, whereas the private plans cover illnesses beyond that age.

The various Integrated Shield Plans42

have confusingly different levels and areas ofcoverage for different illnesses and treatment as well as limit and exclusion clauses.There is generally, for both MediShield and the private Shield plans, a copayment of10% of the total bill and an excess of $1,500 to $3,000.

MediShield only covers hospitalisation/inpatient surgery/day surgery and approvedoutpatient treatments sought on medical grounds in MOH-accredited medicalinstitutions in Singapore. A large number of pre-existing illnesses are excluded. Inaddition, there is also a list of standard excluded medical treatments and expenseswhich MediShield does not cover, including congenital disease, mental illness, AIDSrelated conditions, self-inflicted injuries (Addendum F). Additional exclusions mayalso be imposed on an insured, depending on his or her health condition at the time ofapplication on a case-to-case basis. There is also no coverage beyond 85 years old.

In 2007, it was found that only 22% of the aged inpatients had MediShield coverage;of those 80 - 85 years old only 8.4% were covered; those above 85 (limit of

MediShield coverage) had no coverage10.

That these confusingly complicated schemes are not having their desired effect ofmeeting patients needs is clearly shown by the following

11:

- About 21 per cent of Singaporeans who sought financial counselling from CreditCounselling Singapore had to do so due to medical costs;

- The last available disclosed statistic from the Chairperson of the GovernmentParliamentary Committee (GPC) on Health was that 750,000 people had no form ofmedical insurance

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Master Drugs List

For the purpose of standardisation, a Master Drugs List of approved drugs will be setup. These drugs will be based on the World Health Organisations essential drugs listand will not be determined by cost alone.

All drugs on this list will be identified by their Drug Identification Number or DIN.These drugs will provided by the manufacturer to all healthcare establishments atequal cost. There will be no different bonus or incentive schemes provided todifferent establishments.

The Government will bid for the more expensive drugs to bring cost down, andprovide the drug at bid-price to all healthcare sectors.

Drugs on the list will be reimbursed at cost plus 35% to account for stock keeping,dispensing manpower, ancillary item (labels, envelops, packing) cost, as well as stockexpiry cost.

It is expected that this list will consist of a majority of drugs that are more than 3years old, and proven to be treatment- and cost effective. Where there is more thanone type of drug in a single drug class, the most cost effective drugs will be included.Relatively more expensive new drugs will only be added if they have been shown to

be significantly more effective in relation to cost as compared to older drugs, or if noother alternatives exist.

Vitamins and health supplements will not be covered unless medically indicated.

The Master Drugs List will not be kept secret but will be openly available for publicscrutiny.

Reserve Drugs List

This list is for very expensive novel, unique or special order proprietary drugs/drugregimes.

Drugs on this list include expensive experimental, chemotherapy, immune mediatingdrugs, or unique life-saving drugs with no other drug alternatives, as well as third- orforth-line drugs for patients allergic or intolerant of the first- or second-line drugs.

Drugs on this list will have to be individually approved for each patient using it.

The prices of these drugs will be aggressively negotiated with manufacturers. Oncethe quantity of use of a drug on the reserve list exceeds a certain amount, it willtrigger a larger scale government bid for the said drug. If bidding fails to bring downthe price of the drug, compulsory licensing may be enacted to circumvent unfair

patent laws in order to combat serious diseases and epidemics.

Expensive life-saving proprietary drugs in emergency, national health crisis orepidemic situations will be included in this category. The use of these drugs will begoverned by the 2001 DOHA Declaration

48guidelines, allowing circumventing of

international patent legislation (Addendum H) in times of epidemics or national

health crises.

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The Reserve Drugs List will not be kept secret but will be openly available for publicscrutiny.

National Formulary

The government will produce a National Formulary listing all drugs on the Masterand Reserve Drugs List. The formulary will provide detailed drug information as wellas drug prices. The formulary will be updated regularly and may be web-based.

Primary Care

The Healthcare Plan will concentrate on chronic long term illnesses and acuteillnesses at the tertiary level.

Acute self-limiting illnesses at the primary and secondary level will be subsidised $10per visit. However, in times of declared epidemic, the government can decide tosubsidise these acute illnesses at a higher rate. For house-calls (excepting for theimmobile or those with nursing care considerations, which will be addressed in the

section on Nursing Care), the subsidised rate is a similar $10.

This $10 subsidy will also apply to acute self-limiting non-emergency illnesses seenat A&E departments of hospitals.

For calculation of subsidy for chronic illnesses, a standard consultation fee of $20will be used. Individual GPs may charge more for their consultation fee, but the SMAGuidelines on fees

57will be re-instated and used as a guide to prevent overcharging.

All clinics will be connected via the internet to the central National HealthProgramme database in real time.

The Government will mandate that all Clinic Management Programme producersdevelop and provide at nominal cost upgrade plug-in modules that will allow for asingle click and send function for upload of all clinic attendance and claim data viathe internet to the MOH website at the end of each session or day. This will greatlysimplify the claim process, as well as clinical data updating. The government willsubsidise the development cost of these modules.

Participation of individual clinics in the government Healthcare Plan is notcompulsory. However it is envisaged that the majority of clinics will sign on if clear

benefits can be seen for patients and providers.

Secondary Care

To reduce unnecessary demand by patients for referral to a Specialist for simple,acute, self-limiting conditions, these conditions will similarly be subsidised at $10 pervisit.

For the purpose of chronic or more severe illness reimbursement, the Specialistconsultation fee will be set at $90 for first consultation and $60 for repeatconsultation. Individual specialists may charge more for their consultation fee, but theSMA Guidelines

57on these charges will be re-instated and used as a guide to prevent

overcharging.

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Similarly, all clinics will be connected via the internet to the central National HealthProgramme database in real time and Clinic Manager Programmes will be required tohave click and send functionality for upload of data to the MOH website.

Participation of individual specialist clinics in the government Healthcare Plan is notcompulsory.

There will no longer be different classes at government outpatient clinics. Waitingtimes for appointments and all charges will be the same for all users of the healthcaresystem.

All public hospital-based specialists will no longer attend to private patients. Instead,they can be freed for a certain number of sessions to do private practice by their ownarrangement, in other words, the public hospitals could pay them for example foreight sessions and they could do three sessions in private clinics.

Tertiary Care

All restructured hospitals will be converted back to public hospitals and operated bythe government on a non-profit basis. The clusters will be removed and a centraltransparent administration with representation by community leaders will run thehospitals.

All ward classes will be removed from public hospitals. There will be a single classand all charges will be the same for all hospital occupants, including consultant,medication, investigation and operation charges.

There will no longer be different waiting times for operations dependent on wardclasses. Clinical care will be the same for all patients in hospital. Operations will be

prioritised on the basis of clinical indications.

All new hospitals will be built on a 2-bedder and 3-bedder norm. Special wards likeICU, high dependency or isolation wards will continue to follow current room norms.

Existing hospitals will be up-graded. All 12- to 6-bedded dormitories will beconverted to 4-bedded norms or better (without significantly decreasing total bedcounts) to improve patient care, reduce overcrowding and hospital infections.

These up-gradings will be carried out in stages using cost-effective methods,including the use of dry walls, sliding and folding panels, pre-fabricated modular

components, and other innovations that will cut down renovation time and cost.

Intelligent design will be utilised to design rooms that maximise patient comfort andprivacy when in hospital.

Where feasible and cost effective, some 1-bedded rooms in existing hospitals may beconverted to 2-bedded rooms to increase the overall number of beds.

Current fringe benefits like TVs in rooms etc, will for the meantime be kept as is,but in future such non-essentials will not be a priority, unless they can be made cost-effectively available.

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Despite these conversions, there will continue to be different room standards inexisting hospitals, including a number of single bedded rooms. Hospital admission

policy in these existing hospitals will be: 1-bedded rooms to be filled first, followedby 2-bedded rooms, followed by 4-bedded rooms.

All this will result in a more egalitarian and equitable delivery of tertiary care.

Patients who prefer to be admitted to 1-bedded rooms exclusively may choose privatehealthcare, which will still be part-subsidised by the Healthcare Plan.

There will no longer be a distinction between subsidy plans for acute and communityhospitals in the National Healthcare Plan, thus removing the current bottle-necksituation in the transfer of patients from acute to community hospitals.

(An alternative public hospital admission policy is discussed in Addendum I)

Intermediate and Long Term Care (ILTC)

This would be the main area of concern for an aging population and in time to comethe costs involved in providing intermediate and long term care can become verysubstantial.

The 2010 Population Census19

recorded more than 36,000 senior residents as beingsemi-mobile and more than 8,000 as being non-ambulant. In the decade from 2000 to2010, the number of persons above 65 years grew by 48.7%, and that of personsabove 75 years by 70%.

This would clearly present a huge strain on our resources for caring for the elderlyand non-ambulant sick.

There are two broad categories of intermediate and long-term care healthcare servicesin Singapore - residential and community-based healthcare services. These servicesare managed either by Voluntary Welfare Organisations (VWO) or by privateoperators. The government currently does not directly fund or run these services.

Residential ILTC Services20

These services are provided by:

Community Hospitals

Chronic Sick Hospitals Inpatient Hospice Care

Nursing Homes

Respite Care

Sheltered Home for Ex-Mentally Ill

Community and Chronic Sick Hospitals

There are

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SDP National Healthcare Plan

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